I know the original post is old but I had this exact issue today. I tried all the things listed like the power shell edit, rebooting, uninstalling/reinstalling etc. My fix doesn't seem to be listed so I'll add in case it can help someone down the road. I noticed the device security exclamation point one day in windows defender (see pics) and went in and turned it on. A day or two later I tried to open Cisco CML2 (nested VM) and even tried just a normal linux VM and all failed. The nested CML2 VM had the same error as the original poster and the linux non-nested VMs had a different error, something about authorization. Long story short I turned memory integrity off, rebooted and all my VMs started working. Just to test I turned it back on and it killed all VMs again. This was the fix for me.
Windows 11 Build 10.0.22000
All VMs were Ubuntu based but I don't think it matters.
